When the Supreme Court struck down PASPA on May 14, the proverbial floodgates opened.
The ruling brought the quarter-century-old federal ban on legal sports betting to an end. Suddenly, states not named Nevada could choose to legalize and regulate sports betting within their borders.
To say things have been happening fast in US sports betting is an understatement.
Within a month of the court’s decision, West Virginia, New Jersey and Rhode Island legalized sports betting. That’s in addition to preemptive legislation passed in Delaware, Mississippi, Pennsylvania and New York, in some cases many years earlier.
Delaware and New Jersey started accepting legal sports bets in June. In the case of Delaware, sports betting expanded beyond already-authorized parlay wagers.
But speed isn’t always an asset. Some of the consequences of rushed legislation and a race to be the first to launch sports betting are beginning to rear their heads.
Come back tomorrow?
Normally when it comes to gambling, the regulatory approval process moves quite slowly. Game developers and casino operators see opportunity, and it’s the regulators’ job to pump the brakes and work through the what-if’s that developers and operators don’t consider.
Some might see it as unnecessary burdens, but it leads to questions like, what happens if the controller on GameCo‘s skill based game machine breaks?
Unexpected challenge of esports machine on casino floor. ruggedizing the joystick so people can’t say it failed during play @G2Eshows
— Steve Ruddock (@SteveRuddock) September 28, 2016
It’s these questions that prevent issues like the one that materialized at Meadowlands‘ FanDuel Sportsbook on Tuesday night.
What happened? The Meadowlands sportsbook closes at 1 a.m. and the vault is programmed to close, which happened before some late-night baseball games finished.
Many of the betters are going home tonight with tickets in hand, including me. @FanDuel Meadowlands didn’t have cash in the draws to payout. Amateur hour here. @GUnit_81 @andrewssports @JimmyVaccaro @beatingthebook @paulyhoward @MitchMossRadio @VSiNVinny @VSiNLive
— Eric (@GoldboxATL) July 25, 2018
There seems to be some contradictory reporting on what happened. Some people report sportsbook employees told bettors they could cash in their tickets after the game. FanDuel‘s official statement says the book closes at 1 a.m., at which time they no longer accept or pay out wagers:
“The FanDuel Sportsbook’s business hours of operation last night were to 1 AM, as clearly posted throughout the facility. Once 1 AM hits, our cages are closed. We cannot take wagers or pay out wagers after that time. To be clear, there was no issue with cash on hand. All customers are welcome to return today to collect any winnings, or to mail in any winning tickets for payment.”
But from the sound of it, the book did pay some bettors after 1 a.m., but was unable to pay all winning tickets:
Some questions: The @FanDuel onsite leadership team told us all watching the two last games, they would process winning tickets after the game. They just simply didn’t have enough cash on hand. Some paid, others not.
— Eric (@GoldboxATL) July 25, 2018
Some might see what happened at Meadowlands as a fluke, or nothing more than typical growing pains in a nascent market. I see it as the first of many inevitable self-inflicted hiccups brought on by rushed legislation and/or a rush to launch.
Given the rush to launch, there simply wasn’t enough time to work through the what-if’s (like ruggedizing joysticks) and ask: What happens if the sportsbook closes before the slate of games finishes?
The two reasons to legalize sports betting
There are two reasons for states to legalize sports betting:
- Revenue
- Oversight
Unfortunately, states have focused exclusively on the former and overlooked the latter.
That’s given us policies heavily weighted toward revenue. The quicker we pass a bill, the quicker we can launch sportsbooks. The quicker we launch, the quicker revenue can start rolling in.
But as Derek Longmeier, executive director of the Problem Gambling Network of Ohio said during a panel discussion at the National Conference of Legislators from Gaming States conference, the No. 1 reason problem gamblers gamble is for the money, and states should be wary of following suit and legalizing sports betting solely for the money.
The shame in that is, revenue benefits are inherently built into legalization. However the law is hashed out, stakeholders will likely benefit and the state will get its cut.
The same goes for some aspects of oversight. Things like game integrity and financial auditing will be baked into the cake. That’s not the case when it comes to crafting policies that will help move players from illegal books to legal ones or mitigating the social harms of gambling.
Keith Whyte, executive director of the National Council on Problem Gambling, told PlayNJ.com in March that despite the group’s best efforts, states that have tackled sports betting have all but ignored the implications legal sports betting will have on problem gambling.
Instead of creating carefully considered policy, states have largely given us policy designed to expedite launch.
Faster isn’t always better
No state better illustrates this rush than New Jersey.
In the space of a week, New Jersey passed legislation, issued emergency regulations, and launched two sportsbooks at Monmouth Park and Borgata. Meadowlands and Ocean Resort Casino joined the fray in ensuing weeks.
Granted, the state had been making some preparations for sports betting for several years, but those preparations don’t seem to have penetrated past the macro level. What happened at Meadowlands occurred at the micro level.
To be clear, what happened at Meadowlands is a very minor issue, and one that is easily correctable. But it was also completely avoidable had there not been a rush to launch.
Sure, but you’re missing the point: The book should know its own policies and already thought through these scenarios Making it up as you go (paying some people to be nice) isn’t how this works in regulated markets
— Steve Ruddock (@SteveRuddock) July 25, 2018
As former regulator Richard Schuetz pointed out, these types of unforced errors by legal sportsbooks make it more difficult to transition players from the black market to legal sportsbooks.
To borrow a quote from Ian Malcolm “… were so preoccupied with whether or not they could that they didn’t stop to think if they should.” https://t.co/epy7peRsTJ
— Steve Ruddock (@SteveRuddock) July 25, 2018
And as noted above, eradicating the black market should be one of the main reasons for legalization.
